More than 1,100 of the 1,700 jobs which were at risk when 16 companies in Lord Swraj Paul’s Caparo Industries plc (CIP) were placed in administration on October 19 have been saved.
The news came last Friday (11) from the administrators, PricewaterhouseCoopers (PwC), who said they were “delighted” at the positive outcome.
However, since most of Caparo turned out to be a profitable going concern, questions will now be asked as to why the group’s directors felt they had to call in the administrators. In particular, there will be speculation about whether the banks and/or suppliers put undue pressure on Caparo.
The new owners are the Liberty House Group, headed by the family of Sanjeev Gupta, which bought most of the companies in two tranches.
Gupta, who graduated from Trinity College, Cambridge, in 1995, said the Caparo “businesses contain some world-leading knowledge and skill that have the potential to contribute to a significant engineering revival in the UK”.
Liberty House describes itself as “an international steel and non-ferrous metals group, operating from its four financial hubs in London, Dubai, Singapore and Hong Kong with a network of offices spread across 30 countries around the world. The group has interests in a wide range of strategic assets in Asia, Africa and the UK. Annual turnover is approaching $5 billion (£3.3bn), covering steel, raw materials and non-ferrous metals, employing over 2,000 people globally.”
It is understood that most of the Caparo companies were doing well, but a handful were not. However, the problem was their financing was taken as a whole and not as individual companies.
When the administrators were called in, PwC’s task was to save an estimated 1,700 jobs spread across 16 Caparo companies mostly based in the West Midlands.
Lord Paul, now 84, had spent 47 years building up Caparo as a successful manufacturing group.
Gupta said the latest acquisitions represented a major opportunity to preserve and develop “the cream of British engineering expertise”.
The unions, too, are relieved that job losses at Caparo have been kept to a minimum.
Russell Farrington, regional officer of the GMB union, said: “It has been a worrying few months for the workers that are left at Caparo and we hope they can now enjoy the festivities.”
Unite national officer Harish Patel said: “The Caparo workforce is world class. It’s good to see the new owners recognise that retaining and investing skills is crucial to the business’s success.”
The only job losses were announced by PwC on October 30: “Following a detailed review of the CIP businesses, it is with regret that we now announce 452 redundancies with immediate effect.”
Events took a tragic turn on November 8 when Lord Paul’s youngest son, Angad, 45, who had been appointed Caparo’s chief executive in 2002 because of his “youth and dynamism”, fell to his death in London.
It had been made clear from the outset that the Paul family’s businesses in the US, Poland and India remained unaffected.
“Specifically three sub-sidiaries of Caparo Indus-tries plc are not in admi-nistration. These are Ca-paro Merchant Bar and Caparo India (both UK entities) and Bomet SA (a Polish business). Those businesses continue to ope-rate normally,” PwC clarified in its initial statement on October 19.
On November 28, it was announced that Liberty had bought Caparo Tubular Solutions, thus saving some 350 jobs.
In last week’s announcement, PwC confirmed “the successful conclusion of the sale of substantially all of the remaining businesses and assets of Caparo Industries Group. This latest in a series of major transactions involves the sale of 10 businesses to the Gupta family, whose interests include the SIMEC and Liberty House groups. It follows another series of transactions between the Gupta family and administrators from PwC two weeks ago.”
Matthew Hammond, Mid-lands region chairman for PwC and Caparo lead administrator said in a statement: “This has been a complex and challenging assignment given the size and number of the business operations.”
There was also a comment from Robert Moran, partner at PwC leading the Caparo sales process, who said the sale of the Caparo companies “represents a successful outcome and continuity for a number of businesses which enjoy market leading positions”.
He revealed: “Our process to sell the Caparo businesses extended to over 350 interested parties, and we are delighted to transfer the businesses, assets and staff through to a new investor with significant experience and plans to invest further in the steel, engineering and vehicles sectors.”
“The transactions to date have led to a total of 1,111 Caparo people being transferred and remaining in continued employment,” he added.
While giving credit to PwC for its skill in saving so many jobs, industry experts are wondering if there really was a crisis at Caparo that couldn’t have been resolved given a bit more time.